Supercommittee expected to fail

Word out of Washington is that members of the supercommittee have all but abandoned any hope of reaching a deal for $1.2 trillion in deficit reduction and that the possibility of any kind of smaller deal is remote. Brian Beutler at TalkingPointsMemo quotes a high placed Democratic aide saying: “Conversations are still happening, but its mostly about how to put this thing to bed.”  Beutler interprets this as signaling that the members of the supercommittee are just trying to find a way to put the best face on failure. 

Bottom Line:  Beutler says “ it’s as close to a death knell as we’ve seen so far. “

Read more here: http://tpmdc.talkingpointsmemo.com/2011/11/super-committee-negotiations-now-about-how-to-fail-gracefully.php

Washington Post says basically the same thing: http://www.washingtonpost.com/politics/debt-supercommittee-members-brace-for-failure/2011/11/20/gIQA5bqJfN_story.html

How will the markets react to failure? 

Will the failure of the supercommittee lead to a major market collapse or additional downgrade of U.S. debt?  It doesn't seem likely.  Mark Zandi, chief economist of Moody's Analytics, said Sunday he doesn’t expect much of a reaction from Wall Street since few people expected the supercommittee to reach an agreement.  John Irons at the Economic Policy Institute seems to agree.  

Bottom line:  The failure of the supercommittee isn't going to come as a surprise to very many people.  

Read Zandi here:

http://news.investors.com/Article/592243/201111181811/super-committee-deficit-failure-market-reaction-moodys.htm?src=HPLNews

Read Irons here:

http://www.epi.org/blog/markets-reaction-super-committee-failure/